Empty BHS stores are a signpost to the future of retail
There are no BHS stores on London’s Regent Street, which is one of the few places where there is demand for big stores. Just look at the new Apple Store at 235, a palace for geeks; or Burberry at 121, in which both stairways go to heaven.
Walk any number of miles in any direction and you can soon see what everyday retail really looks like – outside the central London bubble, where Chinese, Russian and Middle Eastern visitors have been outspending British citizens for nigh on 10 years.
In short, it’s not pretty, and most of it is a long way from what consumers now say they want, and from what will persuade them to switch from buying online to going into a store. I don’t need reminding that most goods are still bought in stores, but I am worried that the rate of this shift will make many retail store sizes and formats redundant within the next 10 years.
Stores of the size of a typical BHS have no place here, and it is hard to predict a resurgent department store sector that can fill the empty space (unless it’s pouring with rain, which most consumers never think it is going to, even in sunny England). M&S springs to mind, but even they must accept that the connection they make between clothing and food is no longer relevant to their customers.
Those retailers running away from out-of-town shopping centres or trying to gain a convenient foothold on the high street are also candidates. IKEA was the chief suspect for BHS’ stores, and is still expected to take the latter’s Oxford Street location – but finding retailers that fit the same genre is hard. This is not about DFS showing up on a high street near you, and Primark took a lot less than they were expected to (unless they are now waiting for a better offer).
However, all this speculation is facing the wrong direction. The economics of retailing, coupled with the consumer’s desire for convenience, simplicity and discrete, rewarding experiences, points to the demise of the large stores in most high street locations. The bigger incumbents are embracing a convenient future, and the newer brands, the star players of the future, also want small footprints and flexibility on rent, rates (fat chance) and layout.
How can anyone selling tech to these retailers plan for the future? This is about applying much greater intelligence around sourcing, production, buying, supply chain, merchandising, pricing, promotions, markdowns and returns – all the primary functions of modern retail – in order to find the maximum return from a small (but high-cost) store footprint.